The market landscape and auction structure make the Canadian 3500 MHz midband spectrum auction an interesting one to watch. The auction will kick off on June 15 to release an average of 111 MHz of which around 50 MHz will be set aside for regional wireless operators. This is relatively small in terms of what 5G requires to deliver the promised Gbps throughput. Supply constraints could suggest high prices. But the background is complex and the outcome will depend on the potential demand.
Supply Throttle
The 3500 MHz midband spectrum auction is a first instalment in a two-phased release of midband spectrum. A chunk of 330 MHz in the C-band (3650 – 3980 MHz) is scheduled for 1Q2023 [see here]. However, as 80 MHz of the C-band spectrum will be assigned on shared basis, it leaves 250 MHz for contention among bidders.
A few countries released midband spectrum in instalments: the UK, Hong Kong and a few countries in Eastern Europe are examples. In these auctions, the number of bidders was limited to primarily the incumbent operators. As such, most of these auctions did not yield much of a premium over the reserve price, except in the UK. There, the first instalment of 150 MHz fetched 81.5% higher price than the second instalment of 120 MHz. In effect, the operators have discovered their financial boundary and play book for 5G, and acted accordingly.
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